EDITORIAL: Patience has its limits!

Laurent Pellerin

UPA President

As these lines are being written, thousands of Canadian farmers are descending upon Ottawa to protest government inaction in the face of our farm income crisis.

After more than two months in office, the Conservative government seems to have lost its sensitivity towards farmers, if we refer back to the promises made during the election campaign. Where is that “rapid action” they were talking about? The situation is critical! Farmers in all sectors of production are suffering through a three-year economic shortfall of $6 billion. They cannot take on any more debts!

What must occur for the government to act? For years, Canadian agriculture has been in a state of crisis. For years, we have repeated that the programs under the Agriculture Policy Framework (APF) are inadequate to answer our needs and do not measure up to the American Farm Bill and the European Common Agricultural Policy (CAP). And for years, we have been consulted in search of new avenues of solution, which never materialize. And now, by all indications, it looks like the revision process of the AFP is following the same path. If we had been listened to, if our recommendations had been implemented, if all the opportunities had not been missed, we would not be here today, fearing that the year 2006 turns out to be as bad, if not worse, than 2003.

The government’s inaction is such that corn producers, in order to find a solution, had to lodge a complaint as a last resort with the Canada Border Services Agency, to demand the imposition of countervailing duties and anti-dumping tariffs on American corn imported into Canada. However, even this measure has proven to be insufficient to protect our grain producers and is counterproductive for our animal producers. As a matter of fact, the financial situation of all Canadian farms is unsustainable and it will not be the CAIS program that will change that! The entirety of our income security programs is being threatened.

Although the crisis is at its peak, the recent meeting of federal and provincial ministers of agriculture a couple of weeks ago took on the appearance of a social gathering with rhetorical speeches. Not a word about the farm income crisis, not even a glimpse of the urgent situation in grain production! It is unbelievable. And to top it all off, our elected representatives candidly announced that the method of contributions to the CAIS would be replaced by a new formula of fees. Another expense for producers! And—the discovery of the century—they now propose new consultations with a view to modifying this same CAIS. It seems the Conservatives have caught the same sickness as the Liberals. No wonder our farmers are so fed up.

It is all well and good to be living in this super age of communications and the internet—accumulating consultation upon consultation, piling up reports, but without results. From the farmers’ viewpoint, the government remains deaf and blind, while sitting idly by with its arms folded. What will it take to make them understand? A mass demonstration every week? It is the future of agriculture that is at stake. Farmers have been stretched to the limit. They can no longer count on their accumulated assets to keep their heads above water. The needs are overwhelming—two billion dollars, estimates the CFA. We need these funds to start our seeding. In the medium term, we also need the same tools as our American competitors, in order to operate competitively. And we must stop thinking that the WTO agreement will be the lifesaver of our agriculture; until now, it has only served to bring us closer to the edge of the cliff.

Wood federation must increase its fees

Pierre-Yvon Bégin

Wood producers should prepare for a hike in their mandatory contribution to their provincial federation. The board of directors of the organization has recently adopted a preliminary budget that forecasts an 11 per cent increase in regional fees. Expenses are being held this year at half a million dollars, or one-half of the amount spent in 2000.

“We must raise regional contributions because of the large deficit we accumulated last year,” explained the director-general of the federation, Jean-Pierre Dansereau. He noted that the agreement in principal sets out that the regional contributions are calculated in proportion to the cubic metres of wood sold. Only the region of Bas-Saint-Laurent benefits from a cost ceiling.

First, however, the fee structure must be approved by the general assembly of members. Various local syndicates will soon hold their own general meetings, starting with Labelle and La Mauricie on Wednesday, April 12.

The Fédération des producteurs de bois (FPBQ) will hold their annual general assembly on June 1 and 2 in Quebec City. The question of the increasing land taxes in many municipalities should also be on the agenda. While some woodlot owners have reported municipal tax hikes of 10 to 15 per cent, others have signalled increases of between 200 and 300 per cent.

The various local wood-producer syndicates participated last week in a retreat on the subject of creating forestry boards, as described in the Coulombe Commission on the management of public forests. However, private woodlot owners expressed some doubt concerning these potential forestry boards.

“It is not evident,” stated Jean-Pierre Dansereau, “how the private sector will be affected by these administrative structures. Everyone wonders about the coordination of management between the public and private sectors. The private woodlot owners do not want duplication of structures or procedures, which instead of generating new financial resources for forest restoration and improvement may, in fact, divert them.”

Apple producers meet with Vallières

Marc-Alain Soucy

On March 22, representatives from the Fédération des producteurs de pommes du Québec (FPPQ) met with Yvon Vallières, the Minister of Agriculture, des Pêcheries et de l’Alimentation du Québec (MAPAQ), in Quebec city.

According to their president, Robert Babeu, the minister was receptive to the requests of apple growers. The discussion touched upon the federation’s development plan and the reinforcement of marketing tools, the Canadian program for orchard renewal, methods to reduce orchard damage by deer and the costly measures required in the new environmental regulations that apply to apple producers.

Replanting

The FPPQ representatives asked for financial assistance from MAPAQ for the implementation of the Canadian program for orchard renewal and replants, a $100 million program, financed by the federal and provincial governments and apple growers, which will allow producers to eliminate poorly adapted trees (standard apple trees) that no longer meet the modern requirements of the industry and replace them with dwarf trees that facilitate picking and produce the varieties in demand by consumers.

Orchard damage caused by deer was also discussed at the meeting. The FPPQ is demanding an increase in the price of hunting permits in order to subsidize apple growers for the cost of fences to protect orchards. According to Daniel Ruel, the director-general of the federation, hunters would not be opposed to such a measure if it gave them more access to farmland for hunting. Orchard damage by deer is particularly evident in the Eastern Townships and increasingly in the region southwest of Montreal. Minister Vallières agreed to contact Pierre Corbeil, his counterpart in the Ministère des Ressources Naturelles et de la Faune, to follow up on the issue.

FPPQ representatives also informed Minister Vallières of the major economic impact that the new environmental regulations will have on their operations. The Code de gestion des pesticides (Pesticide management guide), the Regulation respecting groundwater catchment and the Agricultural Operations Regulation (REA) will generate additional costs of $117,000 for the average orchard operator, according to a study by the firm AGECO.

Vallières was surprised to learn the magnitude of the costs required to conform to the new environmental standards, according to Daniel Ruel. He agreed to work with Claude Béchard, minister responsible for the Environment, to study possibilities to reduce the impact of the measures on apple growers.

Agricultural product exporters are worried

Jean-Charles Gagné

Negotiations at the World Trade Organization (WTO) are once again dragging on. During the delay, the U.S. is rushing to sign bilateral trade agreements, which will penalize Canadian exports of agricultural produce. Consequently, a coalition of farm organizations is demanding that federal Minister of Industry David Emerson not bank on the WTO trade talks, and that he start his own bilateral negotiations as soon as possible. Moreover, a WTO agreement will not eliminate the competitive advantage of U.S. trading partners, gained through their free-trade agreements.

“Presently, the U.S. is rushing to negotiate free-trade agreements, which gives them preferential access to markets, to the detriment of Canada. As a result, (…) exports of Canadian agricultural produce will be affected,” reveals a letter dated March 9 and signed by the Canadian Federation of Agriculture (CFA), the Canadian Wheat Board (CWB), the Canadian Pork Council, the Canadian Association of Grain and Oilseed Exporters, the Canola Council of Canada, The Canadian Oilseed Processors Association, Cavendish Farms and Pulse Canada.

The U.S. has concluded free-trade agreements with Central America, Dominican Republic, Morocco, Australia, Chile, Columbia, Singapore, Jordan, Bahrain, Peru and Oman. Negotiations are ongoing with several other countries, including the United Arab Emirates, Equator, Panama, Thailand and the Southern Africa Customs Union. In February, Korea also joined the long line of bargainers.

“We cannot allow our clients to be picked off one by one,” declared the president and director-general of the CWB, Adrian Measner, adding that exports of Canadian wheat and rye generate between three and 4.5 billion dollars per year for Canadian farmers and for the country’s economy. The agreement between the U.S. and Morocco risks excluding Canadian wheat producers from the 400,000 tons of durum wheat exported to this North Africa country. The American agreement with Columbia and Peru sets tariffs of between 15 and 17 per cent on wheat and rye, which are apt to reduce Canadian exports.

The coalition of farm organizations suggests that Canada should begin negotiations as soon as possible with China, Japan, India, Morocco and the Andes Cordillera countries (Columbia, Equator, and Peru).

In the race?

Canada is a trading nation that participates in multinational, regional and bilateral agreements in order to ensure access for its businesses on the world market, notes a letter from International Trade Canada, written in response to the coalition of farm organizations. It indicates that the WTO is an important component of Canada’s trade policy, which also recognized the importance of regional and bilateral negotiations. In addition to the North America Free Trade Agreement (NAFTA), Canada has already signed free-trade agreements with Israel, Chile and Costa Rica. Negotiations are ongoing with Korea and Singapore and a framework trade agreement has been signed with Japan in November 2005. Free trade agreements are also under study with five countries of the Andean community, the Dominican Republic and the 15 members of the community of the Caribbean region. Canada also plans agreements with China and India on the promotion and protection of investments.

Milk producers again reject a price ceiling of $26,000

Jean-Charles Gagné

By a mere 51.3 per cent majority, the milk producers of Quebec rejected a proposition to introduce a ceiling of $26,000 on the price of quota for the next two years. The vote took place during a telephone consultation between March 20 and 24, 2006. This was the second time in 17 months that the producers, when asked to give their opinion on this delicate subject, opted for the status quo. In the fall of 2004, less than 30 per cent of the milk producers voted on an almost identical proposition and again they opted for the status quo, but with only a 60-vote majority. This time around, 84 per cent of the producers expressed their opinion.

Disappointment

“I am disappointed, because this was a reasonable proposition and an appropriate action to take, considering the present context,” declared the President Marcel Groleau of the Fédération des producteurs de lait du Quebec (FPLQ) on March 27. “It is a shame but not a catastrophe.” It was not a great surprise for the FPLQ president, who had been hearing the views of the producers as he attended eight of the 14 annual meetings of the local syndicates. Others, however, were more blunt and spoke of a “historic opportunity missed.”

President Groleau does not blame the milk producers. “The proposition was insufficient to convince a majority of producers. As a federation, we should have discussed more with the producers and explained it better. Instead, we took it for granted that the subject had been adequately debated previously.” However, Groleau does not believe that the FPLQ could have been more transparent. And the fact that the board of directors had approved the lower price was not a determining factor.

“I think that this subject is closed for the time being,” noted Groleau. “We will watch how the present system evolves—and when milk producers are ready for a change, they will say so. This consultation was held at the same time as our efforts to prevent the entry of protein concentrates into Canada and our fight to protect supply management at the WTO, priorities where we will now concentrate our efforts.”

Causes

Groleau speculated that fear—“fear of not having enough quota to satisfy the demand and also the reduction of assets”—was one of the principal causes of the rejection of the lower quota price. The idea that the board of directors would have additional controls over the management of quotas—“a false impression,” he stated—also had a possible effect. “The federation reacted rapidly with a letter to all producers, but it was poorly done.” Nevertheless, Groleau admitted that a reduction of $3,000 in the quota price could not have solved everything. “It is a long-term prospect to try to decrease the debt of dairy farms, through quota prices, since quota sales represent only four per cent of the total quotas held—and quota sold within a family is definitely lower priced.”

Don’t touch my quota!

“Milk producers sent a clear message to the leaders of their federation, saying that the quota belongs to them and it is not community property,” affirmed Réal Proulx, a milk producer in the Outaouais-Laurentides region, a few hours after the vote results had been posted. Proulx was one of the originators of a bulletin sent to 18,000 farmers in Quebec by opponents of the resolution to reduce quota prices (not sent by the regional syndicates). He did congratulate the FPLQ for conducting a consultation process that succeeded in mobilizing 84 per cent of the producers to register their opinion. He criticized the fact that the regional syndicates chose to follow the order of the FPLQ rather than the wishes of the local membership. He also hopes that efforts can now be shifted to other matters, such as a concerted effort against the import of milk ingredients and on the cost of production.

Municipalities are still taking the government to the cleaners, says Pellerin

Pierre-Yvon Bégin

A “very ordinary budget” without any surprises and one in which farmers “will not see any of the benefits.” Those are the unflattering terms used by the president of the Union des producteurs agricoles du Québec (UPA) to describe the recent provincial budget that reserves $673 million for agriculture. In Laurent Pellerin’s view, the “lion’s share” of the increases will go directly to the municipalities through the tax rebate program.

“The municipalities are the big winners in the negotiations concerning land taxes,” declared Pellerin to a reporter from the French-language agricultural newspaper La terre de Chez Nous. He noted that of the $16 million increase directed towards agriculture, a full half will be necessary to cover increased tax reimbursements. Over a two-year period, the municipalities will absorb an extra $25 million through this program.

“The municipalities,” asserted Laurent Pellerin, “continue to take the government to the cleaners, with the blessing of the Minister as she smiles while announcing that she received the collaboration of the municipalities. The fact is that she has been extorted out of an additional $25 million dollars.”

The president of the UPA added that he would have appreciated seeing a larger budget, notably for the program Prime-Vert. He noted that the Liberal government, on the presentation of their fourth budget, has only invested $100 million in the environmental program, despite the fact that during their election campaign they promised to inject $239 million between 2003 and 2008.

Pellerin acknowledged that the announced 30 per cent tax credit for the development of new technologies to process liquid pig manure will no doubt improve the public’s image of agriculture. However, at $200,000 a shot, the investment is an expensive one. “Besides, we need that liquid manure as a natural fertilizer,” he added.

Yvon Vallières, the minister for l’Agriculture,les Pêcheries et l’Alimentation (MAPAQ) expects to obtain an additional $22 million to augment his $673 million budget. However, he noted that last year, he did not refuse a single project in Prime-Vert for lack of funds. In addition, the new regulations concerning the storage of manure piles in the field will allow some time for farmers, as well as for the government, to adjust.

Questioned on the announced fees on water that farmers may have to pay, Yvon Vallières considers that this policy is unavoidable for all departments, but noted that we must wait to see how the charges will be applied by the Fonds des generations, (future generations fund). He added that he was delighted at the creation of this new fund, which is designed to pay down the debt.

For the leader of the Action démocratique du Québec (ADQ), Mario Dumont, the biggest disappointment in this budget concerns rural areas. In his view, the new water fees should go to the regions, to allow them autonomy to finance their development programs. Furthermore, bottled water for export should be the first target for the fees. The ADQ leader does not believe that agriculture should be charged for water.

“When we export water,” he said, “we bring in new money. However, with the difficult situation in which agriculture finds itself presently, if we impose a new cost without creating new revenues, we just continue to make a bad situation worse.”

The agriculture critic for the opposition, Maxime Arseneau, believes that the farming sector “should expect” to pay eventual water fees. However, he recommended that the subject be studied by a commission with the mandate to examine the entire agricultural income question.

As for the budget itself, Arseneau deplored the lack of attention paid to the fisheries, “the economic heart of the coastal regions.”

Another milk quota cut expected

Jean-Charles Gagné

Barring an unexpected change in the market, milk producers will undergo another cut in their milk quota as early as August 2006, in spite of the previous three per cent cut in effect since the beginning of the year.

This was the message clearly implied by the president of the Fédération des producteurs de lait du Québec (FPLQ), Marcel Groleau, during a brief interview on April 3. “I am asking all milk producers not to deliver more milk than their quota allows, from now until August 1, 2006, so that Quebec will not be in a surplus situation with its provincial quota,” he said. Groleau added that, according to the present rules, a province that exceeds its quota must reduce the next year’s production by that same amount. Presently, there are a number of producers over quota, even if they receive nothing for their milk. Each producer must therefore play his or her part in order to avoid penalties to all producers.

At the beginning of the year, the FPLQ had estimated the required level of Quebec milk production, to comply with its market share of the national production. However, a reduction in demand, coupled with higher-than-expected production levels, proved the predictions wrong.

“It is mainly the drop of more than four per cent in butter consumption, compared to the previous 12 month period, that is directly affecting the quota,” noted Groleau. “We know that butter contains 80 per cent milk fat, which is the basis of our milk quota system in Canada. Previously, although butter consumption was decreasing slightly, cheese production was increasing and managed to compensate,” he explained. “This time, butter is heavily hit and the cheese market is stable or slightly decreasing.” Imports of sweetened butter oils also have an effect as they replace cream, containing 10 per cent milk fat, in the production of ice cream. Furthermore, according to the president of the federation, milk products are the innocent victims in the fight against obesity and trans fats.

Private woodlot owners can now carry forward their tax on income over four years

Pierre-Yvon Begin

The wishes of the wood producers have come true. In the future, they will be permitted to carry forward the income earned from the sale of wood cut on private woodlands over four years. In his recent budget, Quebec’s Minister of Finance, Michel Audet, estimated that this measure, aimed at stimulating the sale of wood cut on private woodlots to supply local mills, would cost the province six million dollars.

For the owners of private woodlots this deferral only applies to an amount not exceeding 80 per cent of annual revenues. For a wood producer who earns, for example, $180,000 because of an increased harvest in one year, this means that the anticipated $18,000 income tax could be spread over five years, by paying $3,600 per year.

$925 million for the forestry industry

Minister Audet also announced that he would be allocating $925 million over the next four years to help the forestry industry get through the worst crisis in its history. Severely hit by the rising Canadian dollar and the tariffs on hardwood lumber, the forestry sector can henceforth count on $425 million in the form of loans to modernize their mills. Of this amount, $350 million will be reserved for companies who can offer loan guarantees by way of the funds that they have deposited in trust to cover the countervailing duties and anti-dumping tariffs for hard wood lumber sent to the U.S. The remaining $75 million will be distributed in the form of reimbursable subsidies.

The money will be administrated by Investissement Québec and will target investment and modernization projects dealing with the primary processing of wood. Eligible companies must reduce their costs or the quantities of production inputs in the manufacturing of their products. The government estimates that this program will generate $1.7 billion in new investments.

Other fiscal measures adopted include an amount of $210 million to reduce operating costs, notably through the restoration of damaged hardwood forests. Quebec will also authorize a refundable tax credit to wood producers, up to 40 per cent of the cost of constructing or improving 700 kilometres of forestry access roads and bridges, before 2011. This tax credit is estimated at about $100 million over four years.

Finally, the Minister of Finance announced an additional tax reduction of $120 million until 2010, in the form of a 15 per cent capital tax credit for new investments. Through this measure, he wishes to send a clear message to the management of sawmills, wood panel manufacturers and pulp and paper mills that they can eliminate their tax on capital.

Good news for private woodlot owners, says wood producers’ president

Pierre-Yvon Bégin

The carrying forward of revenues over four years for private woodlot owners has meant good news for the Fédération des producteurs de bois du Québec (FPBQ). The president of the FPBQ, Pierre-Maurice Gagnon, believes the initiative will succeed in convincing a greater number of woodlot owners to harvest their wood. It remains to be seen if the federal government can be convinced to do the same.

“This is good news for the private woodlot owners,” said Gagnon, adding that this measure applies to wood producers who are registered as such and who possess a forest working plan.

“This carrying forward of income is a request that the federation and the local wood syndicates have been making for the last ten to fifteen years. It is even more pertinent now, as new owners are not always inclined to cutting their wood. This is a definite plus and we can say that the government has been listening. We still need to convince the federal government to do the same and we will be working on this through our Quebec ministers.”

In addition, Pierre-Maurice Gagnon hopes that Quebec will boost the $30 million envelope designated for sylvicultural work on private woodlots by agreeing to include this type of project in the $75 million allocated for the new investment strategy.

“We think we have a rightful place in this $75 million program,” he commented, “especially in view of the fact that wood supply from public forests has been reduced by 20 per cent”.

A disastrous situation

“Too little, too late.” Those were the words from the opposition critic for forestry and MNA for Matapédia, Danielle Doyer, who believes that the 2006 budget that was recently announced for Quebec forestry will not be enough to remedy the disastrous situation the industry is going through.

“For three years now,” she added, “private woodlot owners have been requesting more money for forest management. A deferral of revenue is good, but the Coulombe Commission recommended that more should be done in the improvement of both private and public forests. So why does the Minister Corbeil not address that?”

Danielle Doyer has been taking the Liberal government to task for recognizing only 90 per cent of sylvicultural work done in public forests. She also considers that the projected government investment, when divided over four years, does not amount to much. In this regard, she cites the example of the $75 million tagged for loans to mills that will be required to increase their level of wood processing. Also, she questions the program for the construction of forestry roads, supported by $100 million in tax credits, spread over four years.

“There is already $100 million spent on road building each year,” she notes. “In Ontario and New Brunswick, they do not hesitate to help the forestry sector. In Ontario, they have allocated $200 million for roads. For our forestry workers, in the meantime, lost jobs now total 5,000.”

Not adapted

In the opinion of the Conseil de l’industrie forestière (Forest Industry Council), the measures announced in the Audet budget are not well adapted to the present dramatic situation in the forestry sector. The council calculates that the $925 million promised over four years falls well below expectations, starting with the $425 million in the form of guaranteed loans for companies that have paid countervailing duties and anti-dumping fees for hardwood lumber exports to the U.S.

“It is strange that the government offers to cover up to 25 per cent on projects, but these guarantees are supported by money belonging to the industry,” commented the council’s president and general manager, Guy Chevrette. “This program would have been more appropriate for an industry in good health, where companies could be in a position to come up with the remaining 75 per cent.”

The Conseil de l’industrie forestière considers that the $11 million announced for labor costs and the $15 million for forestry roads is good news. The same goes for the possibility of carrying forward revenues for private woodlot owners.